'Back to work' tsar's firm facing second fraud inquiry as it's revealed DWP investigated company nine times in recent years

Stepping down: Emma Harrison's beleaguered firm A4e is to face a second inquiry

Police have launched a second fraud inquiry involving state contracts run by David Cameron’s millionaire ‘back-to-work’ tsar Emma Harrison.

Mrs Harrison’s beleaguered firm A4e volunteered details of the second investigation last night as it tried to counter claims that it was involved in ‘systemic’ abuse of taxpayer-funded contracts.

The move came after the Department for Work and Pensions revealed it had launched no fewer than nine fraud investigations into the firm in recent years.

Ministers were last night distancing themselves from 48-year-old Mrs Harrison, who was appointed by the Prime Minister in 2010 to help get 120,000 ‘problem families’ into work.

A senior Government source indicated she was likely to lose the role if evidence emerged that fraud was widespread and ongoing at the company, which earned £180million from state contracts last year. Her firm could also be stripped of its current lucrative Government deals.

Earlier this month the Daily Mail revealed that Mrs Harrison had paid herself a dividend of £8.6million last year, despite her firm’s failure to meet Government targets on finding jobs for the unemployed.

A4e last night insisted that there was ‘no place for fraud’ at the company. It said the second police inquiry involved a subcontractor on one of the back-to-work contracts it manages, and did not involve any A4e staff. But the revelation came hours after it emerged that Thames Valley had arrested four former A4e staff on suspicion of defrauding the taxpayer.

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The DWP said it had launched nine investigations into alleged fraud at A4e since 2005.

Question: Fiona Mactaggart challenged David Cameron at PMQs yesterday by asking what action was being taken

In five cases the firm was ordered to repay thousands of pounds to the taxpayer after evidence of ‘irregularities’ was uncovered. In one case last year a former employee in Hull pleaded guilty to eight counts of forgery.

In a statement last night the DWP said: ‘We do not intend to comment about the current investigations.

Astonished: Margaret Hodge said she could not believe that the DWP did not routinely call in police to investigate fraud allegations

‘While these cases do not relate to current contracts including the Work Programme, we have reminded A4Ee of their contractual obligations and if there is evidence of systemic fraud in either current or past contracts, we will not hesitate to terminate our commercial relationship with them.’

Margaret Hodge, chairman of the Commons public accounts committee, said: ‘This suggests there may be systemic problems within the organisation. The Government should suspend all contractual obligations until investigations are complete.’

She said it was ‘astonishing’ that the DWP did not routinely call in the police to investigate allegations of fraud. But the DWP said it was for A4e to take ‘appropriate disciplinary action’ in cases where there was not enough evidence to justify a criminal investigation.

In the Commons yesterday former Home Office minister Fiona Mactaggart challenged the Prime Minister over A4e. She asked: ‘What action are you taking to make sure neither vulnerable unemployed people nor the taxpayer are victims of fraud by A4e?’

Mr Cameron said the allegations against the firm appeared to relate to back-to-work contracts it held under the last Labour government.

He said a police investigation was ongoing but added: ‘The investigation needs to be thorough, it needs to get to the truth and then we can take into account its findings.’

A4e is one of five prime contractors to the Government’s flagship Work Programme, which replaced a string of Labour schemes that paid private firms to find jobs for the long-term unemployed. A source at the DWP said it was ‘literally impossible’ for A4e or any other company to defraud the Work Programme in the way that has been alleged in the past because the main payments are not made until people have been in jobs for several days.

In a statement A4e said it operated in an ‘intensely regulated and audited industry’, and had its own internal audit team monitoring the work of staff and subcontractors.

The company said: ‘All these cases relate to historical contracts and that the current Work Programme eliminates any opportunity for malpractice because it is computer-based and payment is on results.’

Chief executive Andrew Dutton said the firm was ‘proud’ of its record, adding: ‘There is no place for fraud at A4e.’

Director of scandal-hit firm used to work for Cameron

A former Tory official who worked in David Cameron’s inner circle and was an aide tohis policy adviser Steve Hilton is now a director of scandal-hit A4e, it emerged last night.

In an example of ‘revolving door politics’, Jonty Olliff-Cooper joined A4e armed with top-drawer Conservative Party contacts.

Critics said it was evidence of the cosy relationship between the Government and A4e, which holds Whitehall contracts worth tens of millions of pounds.

At Mr Cameron’s Policy Unit, Mr Olliff-Cooper was Tory guru Steve Hilton’s close aide for a year from 2008 to 2009.

The party came to power in 2010 and months later Mr Oliff-Cooper moved into the private sector with A4e.

Mr Olliff-Cooper, 29, went to school at Winchester College, then studied modern history at Oxford University before taking an MPhil in cultural and political history at Cambridge University.

After joining the Boston Consulting Group as an associate he worked with the Department for International Development for a year. He then taught for two years at the Prime Minister’s old school, Eton.

He joined the Conservative Party as a policy adviser in 2008 and a year later was a head of programme of the Progressive Conservative Project at Demos – an independent think-tank.

In September 2010 he joined the A4e group as a director of policy and strategy. Months later, A4e founder Emma Harrison was appointed Mr Cameron’s ‘families tsar’ with a brief to get problem households ‘back to work’.

Ten years ago, Mr Olliff-Cooper was filmed lording it over servants as he starred in a TV reality show.

His family appeared in Channel 4’s The Edwardian Country House at Manderston House in Berwickshire in 2002. Critics claimed at the time that Mr Olliff-Cooper played his part with ‘relish’.

When New Labour was in power, A4e forged close links to its ministers. One of A4e’s consultants is David Blunkett, the former work and pensions secretary who advocated private involvement in welfare reform.

Mr Blunkett declares on the register of MPs’ interests that he is paid up to £30,000 a year by A4e. There is no suggestion of impropriety by Mr Blunkett, but he may be embarrassed by the probe.Paul Blomfield, Labour MP for Sheffield Central, said he plans to request details about Mr Olliff-Cooper’s access to Government.

Last night A4e said Mr Olliff-Cooper was abroad and unavailable for comment.